In this paper, we report the experimental observation of diffraction patterns in a ferrofluid comprising of Fe3O4 nanoparticles in hexane by a 10 mW He-Ne laser beam. An external dc magnetic field (0–2 kG) was applied perpendicular to the beam. The diffraction pattern showed a variation at different depths of the sample in both zero and applied magnetic field. The patterns also exhibit a change in shape and size as the external field is varied. This effect arises due to thermally induced self-diffraction under the influence of gravity and external magnetic field.